From HR to HRD: The Evolution of Human Resources Scott · PDF fileAlso discussed is how HR has...

The Evolution of Human Resources 1

Running head: THE EVOLUTION OF HR TO HRD

From HR to HRD: The Evolution of Human Resources

Scott Thor


Abstract

The human resources (HR) profession has evolved significantly in the past century. This paper

discusses the evolution that has led to a transformation of HR, viewed in the traditional role as an

administrative business function, to one of strategic partner and internal consultant, creating

value for the organization. Also discussed is how HR has transformed into human resource

development (HRD) and the components that make up HRD, which include individual

development, career development, performance management, and organizational development.

The paper concludes with a review of the issues facing the HR profession and why addressing

them is critical to creating a high performance organization.


The Evolution of Human Resources

Over the last century human resources (HR) has evolved along with U.S. business

(Hankin, 2005). The Industrial Revolution created several challenges related to people, leading

to a need for the management of these resources (York, 2005). This led to the creation of the first

personnel departments in the 1920’s. Since then the HR function has evolved into a strategic

business partner playing a critical role in developing a high performance organization (HPO) (de

Waal, 2007). This paper traces the history of HR and how it has evolved over the last 100 years

from HR to human resource development (HRD). The paper also discusses the components of

HRD and some of the challenges facing HR professionals today and in the future. The

conclusion provides a discussion of HPOs and how HR contributes to creating such an

organization.

What are Human Resources?

Modern business consists of several types of resources. Gilley, Eggland, and Gilley

(2002) describe them as physical, financial, and human resources. Physical resources include the

components that make up an organization such as buildings, equipment, machinery, and

products. Financial resources consist of the liquid assets of the organization, which include cash,

bonds, stock, and other investments. Human resources are the people within the organization.

Gilley, Eggland, and Gilley argue that it is hard to measure the value of human resources due to a

lack of standard measuring tools, such as those used for quantifying physical and financial

resources. The authors also argue that human resources are just as important as physical and

financial resources, but with no standard method of quantifying their contribution to the

organization they are often overlooked in the summation of the value of an organization.

Regardless of whether one can quantify human resources or not, there is no debating that people


make organizations function, some better than others. Managing and developing these resources

led to the creation of HR and its evolution to HRD.

The History of Human Resources

As the Industrial Revolution began to take form businesses were forced to address three

major challenges related to people:

1. Managing the sudden increase in the workforce due to industrialization

2. Keeping unions from organizing labor

3. Integrating the massive flood of immigrants into the workforce (York, 2005)

With these challenges facing U.S. businesses, the first personnel departments began to

take shape. This new business function was primarily tasked with hiring employees, working

with employee welfare issues such as housing and medical needs, setting compensation levels,

safety, and training (Jamrog & Overholt, 2004).

During this time period Frederick Winslow Taylor began an effort to divide labor,

leading to the creation of what he defined as scientific management. Taylor is best known for his

work studying workers and doing time and motion studies, which were used to increase

efficiency in the workplace. Aside from his work in efficiency, Taylor also established the

foundation for the modern HR profession (Jamrog & Overholt, 2004). Three of Taylor’s

concepts form this foundation. Taylor believed that the individual should match the work to be

completed as closely as possible. To achieve efficiency Taylor believed the worker must have

the mental and physical capacity to do the work, and that over qualified applicants should be

excluded from selection. Second, workers need to be trained in the methods of the job and be

able to work at a safe pace. The final element of Taylor’s scientific management principles that


helped establish the foundation for the modern HR profession is that an incentive program

should be used to ensure workers follow the specified procedures (Taylor, 1916).

With the focus on efficiency and alignment of worker skills matched to job requirements,

little attention was given to the needs of employees. From this need came the human relations

movement, which has been a significant influence in modern HR management (Jamrog &

Overholt, 2004). The most noted study from this movement is the Hawthorne experiment that

took place at the Western Electric Company in Chicago. Completed from 1927-1932, researchers

conducted several studies. In one of the experiments the researchers studied the effects of

illumination on productivity and were surprised to discover that regardless of the illumination

level, productivity went up in both the test and control groups. Nothing positive related to

illumination and industrial efficiency was learned through the experiments (Roethlisberger,

1941). By simply showing attention to the workers and consulting with them on changes,

increases in productivity occurred. The concept that group behavior and the emotions of workers

were linked to employee productivity and morale led to significant research in the human

relations movement for the next two decades (Jamrog & Overholt).

In 1935 the National Labor Relations Act was passed, which allowed workers to select

union representation to negotiate the rights of workers. After the passing of this act the activities

by unions increased significantly. This created the need for personnel departments to deal with

the task of attempting to keep labor unions out, monitoring their efforts, negotiating with the

unions, and ensuring the agreements between the unions and organizations were upheld (Jamrog

& Overholt, 2004).

Despite a growing body of knowledge, much of the focus for the personnel departments

in the 1940’s and 1950’s was related to employee relations and economic needs of the


organization (Jamrog & Overholt, 2004; Dunn, 2006). In the late 1950’s corporate personnel

departments began to take form. Specialized functions such as benefits, labor relations, wages,

and recruitment started to establish themselves as key components to the department (Holbeche,

2005).

In the early 1960’s the personnel function was still viewed as primarily administrative

with tasks such as record keeping and employee relations, but with the passing of the Civil

Rights Act in 1964 their level of importance increased significantly. Lawsuits and settlements

related to discrimination began to gain increasing importance for company executives, leading to

a heightened awareness for the need of specialization within the personnel departments of many

organizations. With the added emphasis on the civil rights of workers and the potential cost to

organizations, significant resources were devoted to activities related to compliance (Jamrog &

Overholt, 2004).

Through the remainder of the 1960’s and into the 1970’s the emphasis on social and

business dynamics created a greater focus on human relations in the personnel department. The

needs of both the worker and organization began to change, creating opportunities for the

personnel department to make a greater contribution. Training, developing and managing

incentive systems, performance appraisal systems, succession planning programs, ensuring

compliance with ever increasing government rules and regulations, equal employment

opportunity, safety and health, and employee benefits all became part of the evolving personnel

department (Rothwell & Prescott, 1998; Dunn, 2006).

Despite making a greater contribution to organizational performance in the 1970’s and

1980’s and transitioning from personnel to human relations, with increasing foreign competition

and rising costs many corporate leaders began to view the activities of HR departments as non-


value added burdens on the financial resources of the organization (Jamrog & Overholt, 2004).

This began an effort to transition from transaction-focused activities to strategic activities,

making HR departments positioned to become partners in fulfilling the strategic needs of the

organization. Also taking place during this period was the emergence of human resource

development (HRD), which places an emphasis on developing people within organizations

(Gilley, Eggland, & Gilley, 2002).

The modern day HR department continues to deal with the transactional based

administrative duties they have been tasked with since the beginning of the Industrial Revolution

in addition to dealing with the increasing demands created by both employee needs and

government regulations, but what has emerged as the primary focus of HR is the need to increase

organizational capability (Holbeche, 2005). Ulrich and Lake (1990) define organizational

capability as, “a business’s ability to establish internal structures and processes that influence its

members to create organization-specific competencies and thus enable the business to adapt to

changing customer and strategic needs” (p. 40). To meet the needs of organizations to increase

their capabilities HR has begun a transformation to HRD.

From HR to HRD

HRD combines the primary elements of HR, people, with the development of both people

and the organization. Gilley, Eggland, and Gilley (2002) refer to development of people as the

increase in knowledge, abilities, and competencies with the purpose of improving the overall

effectiveness of an organization. This development encompasses the first two areas defining

HRD, individual development (ID) and career development. By developing people within an

organization, performance improvement, the third element of HRD, helps improve productivity

and quality, which create a higher probability of increased financial performance. The final


element of HRD is organizational development (OD). Gilley, Eggland, and Gilley describe OD

as continuous improvement of an organization’s culture through intervention activities related to

the vision, mission, values, policies, procedures, and overall working environment.

For an organization to be competitive and productive a continuous cycle of improvement

and change needs to exist. With this, the primary goal of HRD is performance improvement and

organizational change (Gilley, Eggland, & Gilley, 2002). Bringing ID, career development,

performance management, and OD together as the foundation of HRD, Gilley and Maycunich

(2000) define HRD as, “the process of facilitating organizational learning, performance, and

change through organized (formal and informal) interventions, initiatives, and management

actions for the purpose of enhancing an organization’s performance capacity, capability,

competitive readiness, and renewal” (p. 6). To further understand each of the four elements of

HRD, an in depth review of each is necessary.

Individual Development

The primary focus of ID is placed on individual growth and development through both

formal and informal activities (Gilley, Eggland, & Gilley, 2002). Gilley, Eggland, and Gilley

state that the purpose of ID is, “to increase employee knowledge, skills, and competencies and/or

to improve behaviors in current jobs, at the same time addressing the immediate needs of the

organization as well as that of the employee” (p. 30). These types of activities can take place on

the job and through formal instructional based learning. In a traditional sense ID is most

commonly thought of as training, which is generally linked to learning a specific task or skill. ID

goes beyond simple training because it includes all learning activities. Whereas training is most

commonly focused at lower level employees, ID is much broader and encompasses employees at

all levels of an organization.


The evolution of ID has led to creating learning activities that combine the needs of the

organization with those of the individual (Gilley, Eggland, & Gilley 2002). To meet these needs

HR professionals need to play several roles within an organization. Gilley, Eggland, and Gilley

define the three roles as instructor, instructional designer, and contract training consultant.

In each of the ID roles HR professionals are working to create what Senge (1990) defines

as a learning organization. According to Senge, a learning organization can be identified as

having five disciplines:

1. Personal mastery that is the result of an individual gaining expertise through training,

education, and experience.

2. Mental models made up of values, beliefs, attitudes, and assumptions an individual has

and uses to make decisions.

3. Shared vision that is a result of employees in an organization who are in sync with the

mission and direction of the organization.

4. Team learning that is a result of working together and respecting one another.

5. System thinking involving a holistic view of the organization’s culture, mission, strategy,

and management practices.

Marquardt (1996) furthered Senge’s thoughts on learning organizations defining them as

a, “company that learns powerfully and collectively, continually transforming itself to more

effectively manage knowledge” (p. 229). Marquardt (1999) later defined learning organizations

as having four subsystems:

1. Learning at all levels of an organization including individuals, groups and teams, and at

an organizational level is the first subsystem.


2. Organization is the second subsystem consisting of four dimensions that include culture,

vision, strategy, and structure.

3. People are the third subsystem, which includes employees, suppliers, customers, and the

community.

4. The knowledge system that includes the creation, management, storage, transfer, and

utilization of knowledge within an organization makes up the fourth subsystem.

Marquardt (1996) best sums up a learning organization as one in which everyone is

driven by a desire to produce quality results through continuous improvement in a culture where

all activities can be defined by aspirations, reflection, and conceptualization. By investing in

creating a learning organization through ID activities the HR professional begins the process of

building a strategy for improving organizational performance.

Career Development

While ID is focused on individual short-term results, career development takes a long-

term view to individual performance and planning. Gilley, Eggland, and Gilley (2002) define

career development as, “an organized, planned effort comprised of structured activities or

processes that result in a mutual career plotting effort between employees and the organization”

(p. 59). Gutteridge and Otte (1983) suggest that career development is composed of two

subsystems that include career planning and career management.

Gutteridge and Otte (1983) contend that career planning is the responsibility of the

individual and career management that of the organization. Career planning consists of four sub

processes that include choices in occupation, organization, job assignment, and career self-

development. Career management also contains four sub processes that include recruiting and

selection, HR allocation, appraisal and evaluation, and training and development.


Gutteridge and Otte (1983) describe career planning as a process an individual uses to

become aware of their interests, opportunities, and consequences in identifying career goals, and

the programming of work and education activities needed to achieve the goals. They define

career management as an ongoing process preparing, implanting, and monitoring individual

career plans as they relate to the individual’s career plan and the organization’s career system.

The purpose of career development is to help individuals match their interests and needs

for growth and development with that of the organization. Walton (1999) contends that career

development is a critical tool that organizations can use to increase efficiency and improve

employee attitudes related to work, resulting in greater satisfaction. By implementing a career

development program focused on long term results organizations encourage employee

commitment, improve morale and motivation, and reduce turnover (Gilley, Eggland, & Gilley

2002). In addition to reducing turnover, Gilley, Eggland, and Gilley contend that the primary

reason organizations implement career development programs is to develop and promote

employees from within the organization, both of which help maintain a positive recruiting image.

One key tool HR professionals can use in the career planning process is the individual

performance appraisal. In the traditional sense performance appraisals are used to assess past

performance and little emphasis is placed on development activities. Gilley, Boughton, and

Maycunich (1999) suggest that instead of referring to these activities as appraisals they should be

transformed into development evaluations. Using this approach helps motivate the employee to

discuss their career interests and understand how they align with the future direction of the

organization. By taking this approach to career development, organizations begin to build a

culture of growth, which can lead to improved results (Kotter & Heskett, 1992).


The career development process requires a partnership between employees and the

organization. By establishing an open communication process employees can better understand

how the needs of the organization fit their career goals, and organizations can better understand

how they can work with employees to ensure they achieve personal success, while

simultaneously achieving the objectives of the organization.

Performance Management

Both ID and career management have a focus on the individual short and long term

results, respectively. The other side of HRD, performance management and organizational

development (OD) also have a focus on short and long term results, respectively, but from an

organizational perspective.

The importance of performance management is a relatively new development in HRD

(Gilley, Eggland, & Gilley 2002). Gilley, Eggland, and Gilley contend that performance

management is strongly connected to human performance technology (HPT). Fuller and

Farrington (1999) describe HPT as a way of identifying barriers to success faced by employees,

and the process of removing them to allow improvement, and the full realization of employee

potential. Rothwell (1996) describes HPT as a systematic process of identifying gaps in human

performance, planning for future improvements in performance, designing, developing and

implementing solutions to close the gaps, and evaluating both financial and non-financial results

of the implemented solutions.

To be effective at performance management, HR professionals need to be able to define,

study, and evaluate systems within an organization. This requires a basic understanding that all

systems are comprised of inputs, processes, and outputs that are linked to one another. Fuller and

Farrington (1999) describe the human performance system where organizational inputs along


with people and their behavior, result in performance, consequences, and feedback that travels

back through the system in a continuous cycle.

By understanding systems within an organization the HR professional can begin to

implement performance management systems that foster an environment conducive to

continuous problem solving. Gilley, Eggland, and Gilley (2002) suggest that HR professionals

are responsible for creating and implementing systems that encourage employee participation in

identifying and solving problems leading to increased employee and customer satisfaction. They

also suggest that HR professionals are responsible for identifying the competencies needed for

each job role within an organization, creating goals and objectives for the organization, and

identifying the key outputs for each job function. Additional requirements include developing

competency maps, defining performance standards for each job classification, and creating

performance measures. A final set of responsibilities include the creation of performance

evaluation systems that compare actual results to expectations, identifying training opportunities

to minimize the gaps between actual performance and expected performance, and developing

incentive and reward systems that support improved performance.

HR professionals have the opportunity to change the future by making a significant

contribution to organizational performance through the development of systems that are needed

to create a culture of continuous improvement. To do this they will need to step out of the

traditional role they are accustomed to. By doing so they will begin to be viewed as a strategic

partner in organizational development, further enhancing their contribution to the success of

organizations.

Organizational Development


The final component in HRD is organizational development (OD). There are several

definitions of OD, but most share common characteristics and only differ in scope and the

intention of change (Dunn, 2006). OD requires involvement from all employees to be effective

and the support of top management (Conner, 1992; Kotter, 1996), views organizations from a

system-wide perspective and includes planned initiatives directed by third party change agents

that are ongoing (Burke, 1992; French & Bell, 1995), and focuses on measurable results that are

strategically based (French & Bell, 1995; Kotter, 1996; Nadler, 1998).

The primary goal of OD is to improve the performance of organizations (Burke, 1992;

Nadler, 1998). OD provides organizational leaders the data they need to establish performance-

enhancing activities related to business culture, the competitive environment, and performance

systems (Gilley, Eggland, & Gilley 2002). Kotter (1996) suggests that OD helps business leaders

make strategic decisions based on an evaluation of the current state and helps determine a path to

the desired results. OD is perhaps the greatest opportunity for HR professionals to contribute to

the overall direction of an organization.

Gilley, Eggland, and Gilley (2002) believe that many HR professionals fail to see the link

between individual development, the “micro” perspective, and OD, the “macro” viewpoint. They

contend that the micro view, development of individual’s knowledge, abilities, and attitudes,

plays a significant part in achieving the macro objective of OD. They conclude that organizations

cannot improve unless the respective individuals who make up the organizational contributors

and leaders improve.

The evolution from HR to HRD has put the professionals in these roles, once thought of

as simply administrative overhead, into a position in which they can make a significant

contribution to organizational performance through the development of individuals, creating


career planning systems that combine the interests of employees with the needs of the

organization, establishing performance management systems that foster an environment of

continuous improvement and reward positive behavior, and tie all of it together through the

strategic development of the organization that is faced with a constantly changing environment

challenged to meet the demands of the competitive market place, along with employee and

community needs. Never have the opportunities and challenges for HR professionals been

greater.

HR Challenges and Opportunities

The modern day working environment is full of challenges and opportunities for the HR

professional. To be considered a strategic partner in the battle to improve organizational

performance HR professionals will need to identify the problems and implement solutions that

lead to improved results. In Kahnweiler’s (2006) research interviewing successful HR

professionals, he identified five key challenges.

1. Lack of power

2. Conflicting allegiances

3. Negative attitudes towards HR

4. Overcapacity

5. Job security

In many organizations HR serves people who hold higher positions than they do. This

can lead to a challenge of making suggestions for improvement to those they serve (Kahnweiler,

2006). Vosburgh (2007) believes that unlike finance and accounting, who have a basis in legally

mandated processes that are fully defined and structured, HR is still an art form with a significant

amount of variability in how it is performed. Vosburgh argues that this has allowed finance and


accounting to perfect the transaction side of the function and move onto more strategically

oriented areas, whereas HR has done the same with transactional processes, but has not moved

on to the strategic initiatives that could result in greater authority. The participants in

Kahnweiler’s study, knowing that they lack power in some cases, rely on their expert knowledge

and influential power to help drive the relationships with the customers they serve. They also

make sure to focus efforts on areas in which the customers they are working with feel are

important even though they may not agree with them.

A second challenge identified by Kahnweiler (2006) is the need for HR professionals to

serve all levels of employees from the rank and file to executive, which can be a challenge when

the relationship between management and workers is adversarial. HR professionals need to

realize they cannot make everyone happy, and many of the study participants stated that if they

tried to make everyone happy they were not doing their job. Kahnweiler’s participants suggest

that one must know their boundaries and what they will and will not do. This comes from a deep

understanding of individual beliefs and values. Kahnweiler suggests that HR professionals

examine the values and objectives of the organization and ensure they are in alignment with their

values and career goals.

The third challenge identified by Kahnweiler (2006), and perhaps most frequent

challenge for HR, is the negative perception many employees have of HR and those who work

within the function. This viewpoint can come from HR as being seen as simply administrative

overhead and the bottleneck that keeps employees from getting their jobs done, both of which

one could argue are based on past behavior of HR employees. To reduce the negative perception

of HR Kahnweiler’s participants suggested HR professionals become students of the business by

taking an interest in the key issues facing managers. By doing so HR professionals will begin to


better understand how they can contribute to helping solve the problems of the organization.

Another common theme among the participants is to attend industry trade shows to help educate

them in the issues facing the industry.

There is little argument that all professions are being asked to do more with less to meet

the objectives of the organization, and HR professionals are no exception. A fourth challenge

Kahnweiler (2006) uncovered is an overwhelming workload facing HR professionals. One

simple, yet effective, strategy used by participants is to say “no” more than they say “yes” when

being asked to take on additional workload. HR professionals have to know their boundaries and

what they can and cannot do with the time they have. Taking on too much responsibility will

likely lead to a lack of results. HR professionals need to know their capacity and the impact of

potential assignments in order to select the ones that will have the most benefit to the

organization.

The final challenge Kahnweiler (2006) discusses is the vulnerability the HR profession

has related to job security. Kahnweiler suggests that the reason for this vulnerability is due to the

difficulty in quantifying the results of HR work. This has been an ongoing challenge for HR, and

Kahnweiler’s work has not uncovered the solution to the problem, but the study participants

offer some strategies that can be used to reduce the vulnerability. One consistent strategy offered

is educating the organization that not everything that impacts organizational performance is

measured. Kahnweiler suggests that there are many intangible activities that have a direct result

on performance, and HR professionals need to ensure there is a clear understanding of these

activities throughout the organization. Some of the participants also discussed working on

quantifiable projects, such as safety initiatives, and even taking on assignments outside of HR in

a line position such as sales or operations to increase their value to the organization.


Kahnweiler and his research participants present a number of challenges and strategies

that most business professionals would likely agree with, but the problem still remains that HR

activities are largely unquantifiable in relation to the bottom line results of an organization.

Jamrog and Overholt (2004) believe that for HR professionals to truly be considered strategic

partners a new measurement of HR performance is needed. To evolve into a strategic partner

Jamrog and Overholt argue that HR has to establish a new metric-organizational effectiveness.

Jamrog and Overholt (2004) describe organizational effectiveness as a measure of how

well organizations achieve their mission through strategic initiatives. The problem Jamrog and

Overholt suggest is that HR is typically measured on just the output of their activities such as

headcount, turnover rates, time to fill open positions, and training completed. The traditional

measures of HR are not focused on what matters most to organizations; the impact investments

have on meeting the organization’s strategic plan. If organizational effectiveness is a measure of

how well strategic initiatives are being met, Jamrog and Overholt argue that HR, to be

considered a strategic partner, must measure their impact on organizational effectiveness and

how well they are meeting the strategic needs of the organization.

There is no agreed upon single metric to measure organizational effectiveness, but

researchers, consultants, and academics are creating ways in which organizational leaders can

increase effectiveness (Jamrog & Overholt, 2004). Some of the methods for measuring

effectiveness include searching for the correlation of HR activities and business performance

(Huselid, Beker, & Ulrich, 2001), identifying the connection between human capital and

shareholder value (Pfau & Kay, 2002), and research defining factors that separate high

performing from average organizations (Collins, 2001). The sooner HR professionals begin


measuring their impact on organizational effectiveness the more likely they will begin to be

viewed as strategic partners in creating and sustaining a high performance organization.

The Role of HR in High Performance Organizations

In his research of the literature revolving around organizations that outperform others, de

Waal (2007) identifies several characteristics in which HR professionals can have an impact in

creating a high performance organization (HPO). A HPO is defined by de Waal as an

organization that achieves better financial results than its competitors over a longer period of

time by adjusting and reacting to changes, strategically managing through the integration and

alignment of the organization’s structure, continuously improving core competencies, and

viewing employees as the most valuable asset.

In the compilation of the literature reviewed by de Waal (2007) he identified and ranked

40 common characteristics of HPOs. While HR professionals could arguably contribute to each

of the characteristics, two of the top five present the greatest opportunity to contribute in the

creation of a HPO. These include creating a learning environment and designing an effective and

fair reward and incentive system.

As previously discussed in relation to HRD, HR professionals have the opportunity to

create a learning environment through both formal and informal individual development

activities. These initiatives are the foundation for creating a learning organization with a culture

focused on identifying gaps in performance and implementing solutions to close them.

Reward and incentive systems are also the domain of HR professionals, as previously

discussed in relation to performance management and HRD. HR professionals are in a unique

position to develop incentive and reward systems that are linked to organizational objectives.


There has never been a better time for HR professionals to be viewed as strategic partners, and

de Waal’s research clearly defines the link between HR and performance.

The question remains will HR step up to the challenge? The opportunity exists for HR to

increase its value to the success of an organization, but questions still exist as to whether they are

capable of taking on the task presented to them. If they succeed in seizing the opportunity, HR

will begin the transition of being viewed as simply an administrative function, contributing only

to overhead costs, to that of strategic partner, driving initiatives that lead to bottom line results.


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From HR to HRD: The Evolution of Human Resources Scott · PDF fileAlso discussed is how HR has...

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